European Market Update 3/23 - German Import Prices Rise More than Expected

- The European indices are currently trading in negative territory in the session, led lower by the technology sector.
- European government bonds opened lower in the session, but gained brief support from dovish comments from the ECBâs Gaspari. In the UK gilts have remained rather stable, holding ground in the middle end of their session range; gilts currently sit in negative territory.
- The German import price index rose by more than expected during the month of February to 0.5% m/m and 0.8% y/y led by higher costs for metals.
- French consumer spending fell by less than expected during the month of February led by a decline in demand for household durables. According to some analysts income tax cuts and rising employment are likely to sustain spending in the coming months.
In Italy retail sales fell by more than expected to a 21-month low m/m, and an 11-month low y/y.
- In the Euro-Zone the current account balance rose by more than expected to a surplus of â¬2.7B from a surplus of â¬2.3B, due to improvements in the goods trade and current transfer categories.
- The ECBâs Gaspari said overnight that it is premature to talk about further additional interest rate hikes. Gaspari said that inflation expectations are not totally benign, noting that language does not signal immediate action. Gaspari reiterated that current interest rates are appropriate and said of the Euro exchange rate that it is not close to a critical level.
- The Bundesbanks Meister said overnight that wage talks continue to pose an inflation risk in the Euro-Zone. Meister said that the ECB does not want intervene in wage negotiations, and noted that the ECB is trying to gauge inflation over the medium term.
- In an uneventful session on the energy front crude oil futures are currently trading in negative territory, but remain firmly above the $61 handle.